First Tower Company (PBC)

2021: Creation of an independent federal player in the Russian tower infrastructure market

MegaFon and Kismet Capital Group have agreed on a deal that will create an independent federal player in the Russian tower infrastructure market. This was announced on October 27, 2021 by TAdviser representatives of MegaFon.

Deal for ₽94,2 billion MegaFon sold the tower business < br/> Source photo: skesov.ru

The company will be created on the basis of the assets of the First Tower Company (as of October 2021 it is 17 thousand towers and supporting structures) and the Vertical operator (more than 5 thousand objects). The united company will become an independent player with a total portfolio of more than 22 thousand towers.

As part of the transaction "First Tower Company" was estimated at 94.2 billion rubles. The transaction will be financed by Kismet Capital Group's own funds, as well as Sberbank's funds. As a result of the transaction, Kismet will become the majority shareholder of the combined company, will have 5 of 7 representatives on the board of directors of the combined company and will be responsible for the operational management of the business. In turn, MegaFon as a result of the transaction will receive a 25% stake in the combined company. It is planned to close the deal before the end of 2021.

According to MegaFon, the combined tower business will be a fully independent player. The structure of the combined company assumes that neither MegaFon nor another telecom operator will be able to gain control in the company or a majority on the Board of Directors. From MegaFon, the board of directors will include 2 representatives. The company will comply with standards for maintaining commercially sensitive information regarding telecom operators, consistent with the best world practices used by world tower companies.

We are pleased to announce this deal. MegaFon will be able to concentrate on the development of the main business, while maintaining a stake in the combined company with great growth potential, including placement in the public market. The management of the company will be taken over by a strong team from the management of Vertical and PBC. We believe that their experience and expertise will ensure the successful development of the business, said Chairman of the Board of Directors of MegaFon Ivan Streshinsky.

The idea of ​ ​ creating an independent tower operator seems to us very correct and market. Together with key global industry companies, we recognize that our own passive infrastructure is not a competitive quality of a mobile operator. Instead of developing this essentially separate business alone, telecom operators should focus on the quality of the communication itself and the equipment to provide it, as well as on the customer service, putting into the hands of professional managers the construction of supporting structures, land leases and contracts to maintain their uninterrupted work, MegaFon CEO Khachatur Pombukhchan noted.

{{quote 'author = Kismet Capital Group founder Ivan Tavrin emphasized.|Since our investment in Vertical, we have been aimed at expanding our presence in the passive telecom infrastructure market, so combining the assets of Vertical and PBC is a logical first step for us. The combined company is an independent operator in the Russian market and we are interested in further investments in the development of tower business in Russia. We also plan to make the combined company public and will be open to entering new geographies, }}

2017: Network LoRaWan together with NCIV

In December 2017, National Center for the Internet of Things LLC (NCIV) and a subsidiary of MegaFon PJSC First Tower Company JSC (PBC) entered into a cooperation agreement in the framework of the development of Internet of Things infrastructure and smart city projects.

The LoRaWan network, created specifically for IoT, will be deployed throughout Russia. Priority cities are Moscow and St. Petersburg, here the construction of the network has already begun, the basic coverage will be implemented by the end of the first quarter of 2018. At the second stage, active work is planned in the regions.

2016: "First Tower Company" will become independent until 2018

In September 2016, MegaFon Shareholders approved the creation of the First Tower Company (PBC) with an authorized capital of 5 million rubles. The general director of PBK JSC was Teremetsky Alexander, who will combine this position with the position of director for work with telecom operators at MegaFon.

The source of the formation of the authorized capital of the First Tower Company will be MegaFon's retained profit of previous years. MegaFon will be a 100% owner of the company's shares. The resolution on the issue of securities will be approved by the Board of Directors of MegaFon in accordance with the procedure established by the current legislation of the Russian Federation.

From the moment of PBC's state registration, MegaFon will transfer to the Joint Stock Company infrastructure assets and related liabilities, including a portfolio of more than 15,000 antenna-mast structures, including equipment for signal lighting of masts, fences, access roads, roads. The value of assets and liabilities to be transferred will not exceed 10% of the book value of MegaFon's assets as of June 30, 2016 and will not exceed 47,179 million rubles.

2015: MegaFon creates the First Tower Company

On November 27, 2015, MegaFon announced the creation of a subsidiary that will manage the tower infrastructure of the mobile operator. Subsequently, this company can be sold.

According to Interfax, MegaFon's mobile towers will be managed by the First Tower Company (PBC) with an authorized capital of 5 million rubles, which will be 100% owned by the operator. By the end of November 2015, MegaFon has about 14 thousand masts and antenna-mast structures.

MegaFon separates tower infrastructure into a new company - PBC

"PBC is being created to optimize the costs of maintaining and maintaining communication facilities, as well as increase the efficiency of managing tower infrastructure," MegaFon told the agency.

The general company Ivan Tavrin spoke about plans to allocate MegaFon's tower infrastructure to a separate company at the end of October 2015. Then he noted that it is planned to conduct an inventory of the infrastructure and select management to manage the new company, and the whole process will take more than one quarter.

According to Tavrin, the management of cell towers is a "stable and high-margin business," and its leading companies have a margin of 60-70%. The CEO of MegaFon said that after the creation of the tower company, it can be sold.

At the time of the creation of PBC, it is not known in what form MegaFon will transfer the towers to a potential investor - this may be both the sale of the "daughter" and the creation of a joint venture.

According to Mikhail Abramov, an analyst at Veles Capital, MegaFon can earn from 32 to 42 billion rubles on the sale of its cell towers. At the same time, the company is not going to sell structures located on the roofs of houses, Ivan Tavrin previously reported.